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Monday Morning eBriefing

The Monday Morning eBriefing is a members-only digital newsletter which provides up-to-date and informative news on regulatory and legislative matters important to customs brokers, freight forwarders, and NVOCCs. It’s published every Monday at 6 a.m. ET. To submit content or ideas, contact Christopher Gillis, NCBFAA Communications Director, at cgillis@ncbfaa.org.

NCBFAA In the News 

Industry Pushes Back Against Possible Delay of New D&D Billing Rule

Jul, 08, 2024 | Ian Cohen

Shipping, trucking and freight forwarding associations urged the Federal Maritime Commission to reject a request from a group of major ocean carriers seeking to push back the effective date of the FMC’s new demurrage and detention billing requirements (see 2402230049), saying in public comments to the commission that the delay would cause widespread confusion within the shipping industry. But two of those groups said the FMC should at least consider giving the industry more time to adapt to the rules before punishing violators with fines.

The FMC published the comments after receiving a petition from the Ocean Carrier Equipment Management Association earlier this year, which asked the commission to delay the demurrage and detention billing requirements that took effect May 28 (see 2406070015). The OCEMA -- which represents Maersk, Hapag Lloyd, Cosco and other global ocean carriers -- said its members hadn’t had enough time to “adjust practices” to the new billing rule along with a correction to the rule’s preamble later issued by the FMC that clarified how the new requirements apply to cargo moved inland on a through bill of lading (see 2405080026).

Several shipping groups disagreed. The Agriculture Transportation Coalition said OCEMA’s argument that the “whole rule be changed or even disregarded due to a few words in the preamble” is “ludicrous.” AgTC also said OCEMA’s claim that its members haven’t been able to implement the rule is “false.” It pointed to a separate set of public comments submitted by ContainerPort, a drayage carrier, which said most shipping lines were able to “immediately” comply with the new FMC rule.

“From living in the day to day of this,” ContainerPort said, “there seems to be absolutely no issue with compliance or needing more time.”

AgTC added that reversing or suspending the new requirements would “wreak havoc on the entire US supply chain.” The rule “provides significant benefits for the entire supply chain, extending far beyond the D&D provisions themselves, enhancing supply chain fluidity,” the coalition said. “Yet OCEMA would disrupt the entire supply chain, in order to clarify two sentences in a preamble that have no statutory impact.”

The Shippers Coalition, which represents shippers in the food and beverage, manufacturing, and agribusiness industries, said delaying the effective date of the FMC rule “will cause confusion” for shippers about what billing requirements do and don’t apply, especially for commercial transactions already underway. It also said “under no circumstances should the entire rule be delayed or enjoined” because OCEMA said its members are confused about a correction the FMC made to a few sentences of a “notice of tens of thousands of words.”

“The petition, in effect, unreasonably asks the FMC to unscramble the eggs of the rule it worked on so hard for so long and to create a high level of uncertainty,” The Shippers Coalition said. “Unscrambling those eggs could cause confusion as to parties’ rights and obligations, contrary to the public interest.”

The Intermodal Motor Carriers Conference, the Harbor Trucking Association, the National Retail Federation and others made similar points. The NRF said the FMC’s correction to the rule’s preamble “did not change the underlying Final Rule itself,” while the HTA said the OCEMA’s petition “appears to be an attempt to simply push off the standards and add additional confusion to overall implementation and subsequent compliance efforts.”

The IMCC said its members reported that steamship lines have already adjusted their billing practices to comply with the rule, calling OCEMA’s petition “nothing more than an attempt to delay the implementation of a rule they do not like.”

“Suspending the regulation would create extraordinary confusion within the international maritime freight supply chain for no benefit whatsoever,” the IMCC said. “Despite OCEMA’s claims to the contrary, their members seem to be having little difficulty in complying with the terms of the regulation.

The New York/New Jersey Foreign Freight Forwarders and Brokers Association also said it opposes an extension to the FMC’s new billing rules, but it said it agreed with OCEMA that the shipping industry is “undergoing an adjustment process to the new regulations.” It said the FMC should issue public guidance or a set of frequently asked questions on the changes, similar to the ones it issued privately to the National Customs Brokers & Forwarders Association of America (see 2406110010).

The association also said the FMC should wait 90 to 180 days before enforcing the rule to give industry time to comply. The commission during this time would be able to “respond to questions that will help guide the industry as it improves its processes to be complaint,” and carriers, marine terminal operators and others “would have the responsibility for full compliance and rectifying any mistakes.”

“But the Commission would have the option to refrain from issuing penalties if a good faith effort has been made to comply,” the association said.

NCBFAA also suggested the FMC put in place an “interim period of ‘informed compliance,’” which could be a “potential solution that may serve as a middle ground" between OCEMA and shippers. It said this could allow the industry to “work toward full compliance” and update their procedures without fearing civil penalties from the FMC.

The association said this informed compliance period would “mirror” CBP’s “practice with respect to new Customs regulations. The regulated entities would not be exposed to penalties or enforcement action during this period of time.”

NCBFAA said it doesn’t necessarily agree with the arguments made in OCEMA’s petition, but both agree “that additional time for compliance would be beneficial for the industry.”

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